How to help a high schooler use a debit card
To get started, you can discuss what a debit card is and how your teen can use it.
A debit card can be a great way to help your teen get used to paying for purchases with plastic. It doesn’t carry the same risk of debt as a credit card, so in many ways it can act like training wheels for building responsible money habits. However, before setting teens loose with a shiny new debit card, you can set them on a responsible path. Work with your teen to select a card and explain the terms so she understands how to use her debit card wisely.
You could start with your own financial institution—many offer basic checking accounts to customers’ children. Such accounts allow you and your teen to jointly manage the account. For instance, you may be able to receive text alerts when your teen makes a purchase. Some banks may even let you set limits on your child’s ATM withdrawals, so she can only withdraw $40 at a time, for example.
“You may be able to receive text alerts when your teen makes a purchase.”
Explain the card's features
Go over the basics. While using a debit card may seem like second nature to you, the card’s features are likely new to your teen. For example, does she know she can use it at any ATM and not just at ATMs associated with the bank that issued the card? Does she know she can sign up for an online banking account to easily check her balance? Just make sure she knows how to make a strong password and how to help protect her information online. You can also explain other important concepts related to the debit card, such as fees and security.
Prepaid vs. standard. Some banks and card issuers offer prepaid debit cards, which are funded by linking an account. Prepaid cards could help teens stick to a budget, but they may come with fees, often charged monthly or per transaction, and those can add up over time. Prepaid cards may also offer less protection if they’re lost or stolen. Once you’ve chosen a card, be sure your teen is familiar with its features.
Rules and fees. Most adults already know they’re charged a fee when they use another financial institution’s ATM, but teens are unlikely to be aware of this and other standard fees. You can walk your teen through the particulars of the new account, explaining overdraft fees and overdraft protection, any minimum balance requirements and any other fees. For instance, it’s unlikely that your teen knows that overdraft fees could accumulate quickly—they could even be charged several times in a single day.
Set expectations for your teen
With a debit card, teens may have access to more money than they’d likely carry in cash—and thus have greater financial responsibility. This is a good time for parents to set expectations about what teens should use the debit card for (pizza with friends? gas for the car? new school clothes?). You might encourage her to check her account balance regularly. And you may want to sit down with your teen, as often as weekly, to go over debit card transactions and discuss her spending habits.
Safety concerns around card use may be new to your teen, too. You can stress that she should guard her debit card like cash and be sure to carry it in a wallet and not in her pocket. Explain that she shouldn’t share the PIN with anyone (except for her parents, of course) and she shouldn’t let her friends use her card. Teens carrying a debit card should know to alert the card issuer immediately if the card is lost or stolen.
“Show teens how to look for indications that an e-commerce checkout is secure.”
In addition, parents who allow teens to use their debit cards for online shopping should show teens how to look for indications that an e-commerce checkout is secure, such as “https” in the browser bar and a closed padlock symbol next to the web address.
Using a debit card can help teens gain financial independence and learn how to manage their money. By discussing account rules and monitoring debit card use, you’ll help your teen avoid potential problems and learn positive financial habits to carry into adulthood.